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E Procurement A Survey
E Procurement A Survey
Abstract: This paper examines the optimization of purchasing through the use of Internet based systems (electronic Procurement).
The focus of this paper is the impact of these systems on the supply chain structure and how they are able to change the procurement
function to a strategic operating resource for the organization. The empirical research information is based upon a study carried out
that analyzed the supply chain strategies being adopted by public organizations. Respondents ranged from 100 to state corporations,
experienced users of e-procurement systems to those just starting out on their pilot investigations of the contribution of such systems to
purchasing efficiency. A significant result from the study was that whilst a large number of organizations were e-procurement adopters,
less than half of them believed that procurement had a strategic function. The case of state corporations is used, as an example,
illustrating the ability of state organizations with a strategic capability in procurement, achieved through e-procurement systems,
gaining significant organizational benefits via cost and process reductions.
Keywords: Business-to-Business, E-Business, E-Commerce, E-Procurement, Internet, state corporations, Supply Chain.
expected productivity gains due to poor user acceptance and
use of new technology (Venkatesh and Speier, 1999).
1. Introduction
The use of technology for procurement has generated great
excitement because of its potential to reduce procurement
costs and improve strategic sourcing (de Boer et al., 2002;
van Weele, 2002; Subramaniam and Shaw, 2002). LuckingReiley and Spulber (2001) argue that the potential cost
savings in this area are substantial, and it seems that the
potential merit of various electronic procurement forms is
largely undisputed (de Boer et al., 2002). Previous research
however show that there are still doubts about the real
benefits of e-procurement, and that organizations that
already have an inter-organizational information system of
some kind not yet have decided whether it is an
improvement over existing systems or not (Subramaniam
and Shaw, 2002).
Even if the conditions for a successful introduction are
present, the introduction and implementation of an eordering system can be problematic, due to all sorts of
political considerations and sensitivities in the field of
purchasing within enterprises (van Weele, 2002). Several
barriers and problems exist (Chircu and Kauffman, 2000),
and they have to be tackled successfully if potential value of
the investment will be met (Davern and Kauffman, 2000).
One of the largest problems according to empirical data
(Arbin, 2003) and research (Davis, 1989; Subramaniam and
Shaw, 2002; Reunis et al., 2005) is to get potential users in
the organization to adopt and use the e-procurement (eordering) system, when ordering products and services.
There is growing evidence of unrealized or less than
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International Journal of Science and Research (IJSR), India Online ISSN: 2319-7064
within the public sector in the Kenya leads to fundamental
changes in the processes, organisational structures and costs.
2. Background
In the last 11 years there has been a growing interest in
Supply Chain Management. This interest has been primarily
focused on the private sector. Supply Chain Management
has been used interchangeably with Logistics Management,
Materials Management and more recently the emphasis has
shifted towards procurement. Perhaps the simplest
explanation is to think of a supply chain as having five
distinct parts Buy, Make, Store, Move and Sell. Across
these five parts are processes that control the supply chain.
Information is passed through these various stages. At each
stage there are a number of sub-processes which can be
defined as processes in their own right. What we then see
across a number of definitions (Christopher, 1998, SimchiLevi et al, 2000, Council of Logistics Management) is a
common theme of the supply chain being a process. It is also
evident that information related to the process is critical and
fundamental for the control, management and understanding
of the process. McCormack and Johnson (2001) define a
process as a specific group of activities and subordinate
tasks which results in the performance of a service that is of
value.
3. Adoption
In this paper, i define adoption as making an active
contribution towards the implementation or use of the eprocurement tool. Adoption includes using the tool,
contributing towards the usage by others, or stimulating the
spread of adoption of the tool. This definition implies that an
actor can be considered an adopter of the tool, as soon as the
actor contributes to a further spread of the tool, without
using the tool himself.
In general, adoption models and social network only
consider positive influences and exclude the possibility of
one actor negatively influencing another when it comes to
adoption behavior. Arguably, adoption does not only have a
positive dimension, but can also include a negative
dimension, i.e. active deviation of the implementation
objective. This active resistance can also spread through
interactions between actors, causing competing social
networks of adopters and non-adopters within an
organization.
Some individuals will be inclined to adopt an innovation
earlier than others, despite of any management efforts and
social influences. Argarwal & Prasad (1998) recognize this
human characteristic as the personal dispositional
innovativeness (PDI), which describes an individuals
willingness to adapt to an innovation, independent of
internal or external influences. Goldsmith & Hofacker
(1991) show that PDI is domain specific, which suggests
inherent differences between for instance the procurement
domain and the IT domain. Other traits of a person might
influence the PDI or the adoption directly. Some authors
stress certain individual factors related to PDI like
innovativeness, computer self-efficacy, and experience
(Venkatesh & Davis 2000).
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the claimed savings. Furthermore, engaging suppliers in the
process, especially smaller organizations, is also proving to
be difficult given the levels of investment expected of them
in their provision of catalogue information to buyers, and
marketplaces using different technologies, platforms and
business languages (OGC, 2002). Although a number of
public sector agencies are actively pursuing e-Procurement,
evidence from business press reveals that many of the efforts
are not meeting original expectations.
Despite the benefits that can be achieved from a successful
e-Procurement initiative implementation in the public sector,
the business press has reported a number of failures of eProcurement initiatives in a number of public sector
agencies in the Germany, China and Australia in recent
years. The major reasons can be linked to the issued raised
in the previous paragraph: complexity, compatibility, an
absence of savings and unwillingness of markets to
participate. As Heywood et al (2002) observe, it is by no
means certain that all the potential of e-procurement will be
realised and it is inevitable that huge sums of money, and
considerable effort, will be wasted by some organizations in
pursuit of the business benefits.
These views are supported by a number of examples. The
US Governments General Services Administration (GSA)
had been criticized following recent embarrassing
revelations that it was unreliable and error prone (KableNet,
2001). Furthermore, the UK government decided not to
extend its pilot e-tendering system across Whitehall
(KableNet 2002). In a similar vein, Bell (2003), Doesburg
(2003) and Gifford (2003) report that the New Zealand
government has reported that its GoProcure e-Procurement
system has proved more complex to develop than expected.
UK Ministry of Defence is yet to achieve savings three years
after its e-Procurement service first started running
(KableNet, 2003). According to Government Technology
(2002), State of South Carolina abandoned its e-Procurement
system in June, 2002 and pilot projects were shut down in
2002 in Massachusetts, Indiana, and Michigan. The Virginia
state auditor reported only 1.5% of the states business was
transacted through its state-of-the-art system, which cost
$USD14.9 million (Government Technology, 2003).
On the other hand, there is a view that rumors of eProcurements demise have been greatly exaggerated
(Harris, 2002). Davila et al. (2002), for example, report that
a survey of 168 US public and private sector organizations
indicated that e-Procurement technologies will become an
important part of supply chain management and that the rate
of adoption will accelerate as the adopters share their
experiences of success factors and perceptions of low risk.
Similarly, Barua et al. (2001) identified e-Procurement as
the most important element of e-business operational
excellence for large corporations.
Such success and failure stories imply that there is a need for
a much better understanding, and use of e-Procurement
implementations in the public sector. Tonkin (2003),
provides a succinct summary of this sectors relationship
with e-Procurement: The public sector cannot afford to
uncritically follow the latest fads and fashions, it can,
however, from a strong base of self knowledge, confidence
and with an eye to the future become an innovator in this
6. Supplier Adoption
Project success in this case, is closely related to early
supplier involvement. It is important to demonstrate the
proposed solution to the suppliers and discuss any necessary
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changes, issues and concerns such as various options in
developing and maintaining supplier catalogues (Birks et al.,
2001). According to the OSD (2001), providing
opportunities for suppliers to offer their feedback will allow
the procurement department to monitor areas for
improvement and change in advance. Because many
suppliers may be unwilling to conduct business
electronically with public sector agencies because they are
unclear about the benefits that they will gain, they might see
e-Procurement as a means by which public sector agencies
will attempt to force down prices (CIPFA, 2002). Suppliers,
therefore, should be educated on the e-Procurement benefits
that can be provided to them. Suppliers are, of course, an
integral part of e-Procurement and should be contacted and
consulted as early as possible in the project. The degree to
which the success of an e-Procurement initiative can be
realized is directly related to the level of e-readiness of
suppliers, and appropriate communication with suppliers is
therefore important (AOT, 2003).
Proposition 2: The high level of supplier adoption is
positively associated with the organization and management
implementation factor of an e-Procurement initiative.
10.
11.
Proposition 3: The high level of compliance with best
practice/project management is positively associated with
the organization and management implementation factor of
an e-Procurement initiative.
Findings
8. System Integration
Given the intense publicity surrounding the impact of eprocurement, the findings of the study reflected much of the
focus of recent management writing and system vendors
publicity. The four main benefits of e-procurement identified
by respondents were:
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40% saw improvements in planning would be a benefit
from e-procurement adoption.
A major concern here is the apparent lack of clear strategic
awareness of the implication and benefits of e-procurement.
It is certainly clear that procurement is viewed as an
administrative process in the majority of respondent
organizations, the exception being organizations over Kshs1
billion turnovers. Large organizations typically invest
greater resource into their purchasing and procurement
function for such organizations procurement is of major
strategic importance. This was underlined in the study by the
planned increase in the level of outsourcing by 56.5% of
respondents as a direct consequence of e-procurement
adoption.
12. Conclusions
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